After publishing yesterday’s post, I encountered an interesting objection from Anton Epikhin, the lead of the channel RLN.Today. He argued that my idea of privatizing a profitable state-owned company is not the best thing that can be done to abolish the state. In short, the reasoning is as follows. People are used to a certain set of public goods provided by the state, and the state’s refusal to provide them would cause widespread outrage, and therefore the situation would be quickly rolled back. Consequently, from a purely political standpoint, it is quite difficult to strip the state of habitual functions such as the police or courts, even if it provides these services at a high cost and very low quality. However, one can try to sell citizens the idea that these services be provided by joint-stock companies where all citizens are shareholders. But a “Court” JSC is also not the most obvious idea. However, if one starts with a state investment company, then why not; this type of state ownership is certainly not essential, and the idea of transferring it to citizens would be successful. Instead of selling it at auction to private individuals, with a subsequent distribution of the proceeds among citizens, the company’s shares could be distributed equally among citizens. After the change of nominal owners, the company would continue to operate in the same mode, except that instead of paying dividends to the sole shareholder—the state—it would pay them to the new shareholders—the citizens.
I reasonably countered that it doesn’t really make a difference. After receiving the shares, people will still decide for themselves what to do with them—hold them, sell them, or buy them from others to obtain a large stake. With equal success, one could have first sold them to those interested, and then let them spend the proceeds however they wish. But no, Anton replies, there is a difference. Having seen the example of high-liquidity state assets and realized that they can be transferred to the ownership of citizens, citizens will get a taste for it and will be more likely after some time to demand that this operation be repeated with other assets, including the army and the police. But if the investment company were simply sold and the money distributed, it would be much easier to say about other state structures that “you don’t understand, this is different,” and that “this other thing” will be funded by taxes.
It still seems to me that there is no significant difference. More precisely, there is none from an economic point of view, but as for which specific decision from a psychological and political rhetoric standpoint will be easier to sell to people, and which is more likely to be followed by further steps toward the denationalization of society—that is difficult for me to say. So I am simply describing this point of view; perhaps it is indeed valid, and in that case, any Singaporeans among my readers should, of course, insist specifically on such an option for the reorganization of Temasek Holdings.
